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MOSL: AUTOMOBILES: Retail sales mixed across segments; Sequential increase in CV discounts in high-ton segments

AUTOMOBILES: Retail sales mixed across segments; Sequential increase in CV discounts in high-ton segments

 

Our interaction with leading channel partners indicates moderation in retail sales across segments, particularly in rural areas. This can largely be attributed to weak sentiment due to low farm realizations, a delay in the onset of monsoon, and lower crop loan disbursement by financial institutions.

• CVs: Demand remains soft in key markets like Gujarat, Rajasthan and UP, as the holding back of purchases by customers is resulting in inventory levels of ~40-45 days. Discounts per unit, particularly in high-ton vehicles, have increased sequentially. We expect CV wholesales for AL and TTMT to grow by 11% YoY and 42% YoY, respectively, in Jun-18.
• 2Ws: Demand momentum remains mixed, with retail sales growth moderating to 7-9% in key rural markets (v/s average of +10-11%), while growth remaining steady MoM in urban markets. TVSL and HMCL wholesales are expected to grow 11% YoY and 9% YoY, respectively, in Jun-18.
• PVs: MSIL is witnessing retail growth of 8-9% in key urban markets, while its sales growth in rural markets has moderated to 7-9%. MM, too, is witnessing demand softness in key rural markets.
• Price hikes: 2W – TVSL raised prices of its recently launched Apache 4V and Apache 200 by INR500 each. TTMT CVs – indicating price hike of 1-1.5% in selected models.